In a Complaint brought by the SEC on August 17, 2012 it was alleged that online
marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group had raised
money from more than one million Internet customers nationwide and overseas through
the website ZeekRewards.com, which Mr. Burks began in January 2011.

According to the SEC’s complaint, filed in federal court in Charlotte, N.C., customers
were offered several ways to earn money through the ZeekRewards program, two of
which involved purchasing securities in the form of investment contracts. These
securities offerings were not registered with the SEC as required under the federal
securities laws.

The SEC alleged that investors were collectively promised up to 50 percent of the
company’s daily net profits through a profit sharing system in which they accumulated
rewards points that could be used for cash payouts. However, the website fraudulently
conveyed the false impression that the company was extremely profitable when, in
fact, the payouts to investors bore no relation to the company’s net profits. Most
of ZeekRewards’ total revenues and the “net profits” paid to investors had been
comprised of funds received from new investors in classic Ponzi scheme fashion.

The SEC’s complaint alleged that the scheme was teetering on collapse with investor
funds at risk of dissipation without its emergency enforcement action. In July 2012,
ZeekRewards brought in approximately $162 million while total investor cash payouts
were approximately $160 million. If customers continued to increasingly elect to
receive cash payouts rather than reinvesting their money to reach higher levels
of rewards points, ZeekRewards’ cash outflows would have eventually exceed its total
revenue.

The law suit brought by the SEC was settled by consent on August 17, 2012. The consent
settlement included agreements by Mr. Burks to pay a $4 million penalty and hand
the company over to a court appointed temporary Receiver. No one representing Rex
Venture Group has contested the merits of the SEC’s allegations. As a result, the
order of the court settled the case.

According to the SEC’s complaint, ZeekRewards paid out nearly $375 million to investors
up to the date of the Complaint and held approximately $225 million in investor
funds in 15 foreign and domestic financial institutions. Those funds have been frozen
under the emergency asset freeze granted by the court at the SEC’s request and subsequent
orders of the court. Meanwhile, Mr. Burks has personally siphoned several million
dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he
distributed at least $1 million to family members. Mr. Burks has relinquished his
interest in the company and its assets, and has paid a $4 million penalty. Additionally,
the court has appointed a temporary Receiver to collect, marshal, manage and distribute
remaining assets for return to harmed investors.

No. When you purchase a cashier’s check, the bank immediately debits the money from
your account, and the cashier’s check represents the bank’s obligation to pay the
amount of the check. A bank issuing a cashier’s check is deemed to have accepted
the check upon its issuance.

The Uniform Commercial Code provides that a customer purchasing a cashier’s or teller’s
check has no right to stop payment (see Section 4-403, cmt. 4). If a bank refuses
to pay a cashier’s check or teller’s check presented by the Receiver, it may be
required to pay for the Receiver’s expenses and loss of interest resulting from
the nonpayment, as well as consequential damages (see Section 3-411).

All cashier’s checks and teller’s checks issued to ZeekRewards constitute assets
of the Receivership Estate. Claims for monies invested in ZeekRewards through cashier’s
checks will be administered together with other claims on the Receivership Estate.

The court’s orders and the Uniform Commercial Code establish that cashier’s checks
in the Receiver’s possession are Receivership Assets. The Receiver is required to
present these cashier’s checks for payment and has no discretion not to.

No. Declarations of loss cannot be submitted for checks that you sent to ZeekRewards,
because you did not actually lose the check. Cashier’s checks are assets of the
Receivership Estate. If you obtain payment from your bank using a declaration of
loss for a cashier’s check that you sent to ZeekRewards, and your bank denies payment
on that cashier's check when it is deposited by the Receiver, the Receiver may bring
legal action against you to recover the amount of the cashier’s check and additional
damages.

It depends. If your money order is a bank money order signed by your bank, it is
treated as the equivalent of a teller’s check, and your bank cannot stop payment
on the money order. If your money order is a personal money order signed by you
and not by the bank, it is treated as the equivalent of a personal check, and payment
on the check may be stopped so long as the check has not yet been cashed and you
give your bank sufficient notice (see Section 3-104, cmt. 4).

Yes. That is a matter between you and your bank. Banks are required to stop such
payments if they receive notice at least three business days before the next scheduled
payment (see 12 C.F.R. § 205.10(c)).

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